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April 29, 2013

Southeast Asian Migrants Revitalizing Taiwan Economy

by Ralph Jennings

Decades ago Taiwan was one of the four fastest-growing economies in Asia. But factories have moved away since then, making China the region’s growth leader.  That dynamic has forced Taiwan to look increasingly to its Southeast Asian migrant workers to get the country's economy back on track. 

Taiwan’s annual economic growth of less than four percent has left it lagging behind the rest of industrialized Asia.  Before 2000, Taiwan was growing quickly, reaching a Gross Domestic Product (GDP) of $467 billion as contracts for high-tech manufacturing put its economy on a level with Singapore and South Korea.

That was before China became the region’s low-cost manufacturing hotspot, luring capital away from Taiwan and avoiding free trade deals with the island’s Beijing-hostile government. Taiwan’s birth rate was also falling and at one child per woman it ranks now as one of the world’s lowest, a threat to productivity.
 
But a growing population of migrant workers is reheating Taiwan’s economy.

Peter O’Neill, a Catholic Church priest, who counsels migrants, says Southeast Asians do valuable work for up to 18 hours per day and get paid less than the Taiwanese.
 
“Those industries are where the working conditions are very dangerous, very hot, very uncomfortable, because Taiwanese people no longer want to work in the manufacturing sector,” O'Neill stated.
 
Nearly 450,000 Southeast Asian workers live in Taiwan today, up from 270,000 just 15 years ago. More than half come from Indonesia and the rest are mainly Thai, Filipino or Vietnamese. Migrants reach Taiwan on short-term labor contracts and are paid minimum wage, earning enough on average by their third year to send money to relatively poor families back home.
 
Taiwan’s government relaxed migrant labor laws last year to let in more workers. The move was part of a bigger directive to bring Taiwanese factories home from China, where they have operated in some cases for nearly three decades.
 
There is no official estimate on migrant labor’s contribution to Taiwan’s economy,  but Liu Shao-yin, supervisor with the Catholic Migrant Centers, a nongovernmental migrant workers service group, said foreign labor now keeps locally owned factories at home.
 
She said the problem Taiwan would face is factory owners moving out of Taiwan. They would relocate plants to mainland China or Southeast Asia because of lower labor costs in those regions, she said, leaving relatively few in Taiwan.
 
Taiwan’s increasing reliance on migrant workers puts it in a league with Hong Kong, Singapore and other countries that look to their poorer neighbors for labor.

Migrants in Taiwan fill a range of jobs. Filipinos may work as engineers for Taiwanese information technology firms. Thai workers can be found doing tough factory work and other Southeast Asians help on fishing boats, a job that many Taiwanese consider dangerous.
 
Many of the 100,000 Vietnamese migrants care for Taiwan’s elderly, freeing up younger Taiwanese who would normally look after their parents to work.
 
Homecare workers earn the equivalent of $530 per month, and factory labor pays a monthly $638, both below average wages for Taiwan.

Filipino national Emmanuel Nanocatcat came a year ago to earn minimum wage plus overtime pay at a family-owned factory in Taipei. “For now, the economy is down, so the changes are really small. Still if you work in the Philippines compared to here, you earn more [in Taiwan]. The salary is good here,” he said.

Some Taiwanese consider migrants a threat as their numbers grow and their lifestyles influence the formerly more homogenous Chinese society.
 
But Taiwan’s government expects higher economic growth this year than last, and investment bank Barclays Capital said the island attracted a notable $5 billion in foreign direct investment over the past four months.
 
Taipei is widely expected to allow more Southeast Asian migrant workers to settle in Taiwan in order to sustain the recent faster rate of economic growth.